The new coronavirus, which has forced millions of Europeans to shelter at home, could be a boon to Disney+, the Hollywood conglomerate’s online streaming service, which is set to roll out across much of western Europe on Tuesday.
Research by British-based Futuresource Consulting suggests stay-at-home directives issued by several European countries in their efforts to stem the spread of the coronavirus outbreak will boost uptake of Disney+ on the continent.
“The current stay-at-home directive due to the coronavirus, along with additional distribution partnerships, are likely to see subscriber uptake reach even higher levels than previously anticipated,” forecasts Futuresource, saying that European subscriptions to Disney+ will “exceed 10 million,” making it Europe’s third-largest SVOD service behind just Netflix and Amazon Prime. “With the current unorthodox situation we find ourselves in, subscriptions will be further boosted,” the group noted.
“Launching in seven markets simultaneously marks a new milestone for Disney+,“ said Kevin Mayer, Chairman of Walt Disney Direct-to-Consumer & International, in a statement marking Tuesday’s bow. “We humbly hope that this service can bring some much-needed moments of respite for families during these difficult times.”
Ahead of the Tuesday launch, Disney said that it would be voluntarily limiting the bandwidth utilization of its Disney+ service to comply with requests from European Union authorities worried about the increased demands on online networks during the pandemic. Disney said the move, similar to that made last week by Netflix, YouTube and other online video services in Europe, would lower overall bandwidth utilization by at least 25 percent in all of the markets where Disney+ is debuting this week.
“This speed throttling is not expected to have any major impact on uptake or usage, particularly as it becomes the ‘new normal’ over the coming months,” David Sidebottom of Futuresource told The Hollywood Reporter. “Our view is that most consumers will be prepared to sacrifice picture quality to ensure a seamless viewing (and audio) experience as consumers realign their expectations to this new norm — indeed, many consumers may barely notice any difference as long as broadband networks continue to cope with overall increase in online traffic.”
Sidebottom said Disney+’s delay in France is also unlikely to have a major impact on the service’s overall subscriber uptake. “We could well see pent-up demand build further” in the country because of the delay, he noted.
There is broad consensus among media analysts that streaming services will be the big winners in the current crisis. Around a fifth of households worldwide are now under stay-at-home orders, measures aimed at stemming the spread of COVID-19, the illness caused by the novel coronavirus.
“In the midst all of the concerns around coronavirus, if there is one bright spot in the media industry, it is that this crisis will likely accelerate consumer adoption of subscription streaming services,” MoffettNathanson analyst Michal Nathanson wrote Tuesday in a report entitled “Disney: Sizing the Disney+ International Opportunity.” “With developments around coronavirus, and subsequent cancellation of sports around the globe, we believe demand for streaming services will remain strong as users find alternative means of entertainment while practicing ‘social distancing.'”
The analyst expects Disney+ to add 19 million subscribers in western Europe and India (where the streamer has postponed its planned March 29 launch amid COVID-19 concerns) this year, with 23 million additional subscribers coming on board in 2021 as the platform launches in Eastern Europe, Latin America and across the Asian Pacific region. “By 2024, we expect Disney+ paid subs to reach 129 million with 52 million in the U.S. and 77 million internationally,” they write.
Disney+ will benefit from Netflix having prepared international markets for its similar SVOD model, they argue, but suggest Disney will not need to follow Netflix in building up local language offerings from scratch, given that Disney, Pixar, Star Wars and Marvel content already has a proven global audience. MoffettNathanson notes that in 2019, Disney had a 30 percent to 40 percent share of the box office regardless of region, even in non-English language markets. Disney+ “can rely on its library of proven brands to more efficiently scale across the globe,” they argue.
In the four largest non-English language markets in Europe: France, Germany, Italy, Spain, MoffettNathanson notes that Disney titles accounted for 14 of the 20 top-grossing films of 2019.
Futuresource expects Disney+ to quickly become the No. 3 player in most of its phase-two launch countries in Europe, but the key challenge will be “maintaining its growth in new subscriptions after such quick traction, whilst retaining its existing monthly subscribers.” Futuresource cited Disney’s latest financial results in February that showed the uptake of Disney+ in phase-one territories, meaning the U.S., Canada and the Netherlands, slowed in the early weeks of 2020.
Futuresource’s research indicates most people who intend to sign up for Disney+ will do so within one month after the service launches in their territory.
To maintain its initial momentum, Futuresource argues, Disney+ needs to expand distribution partnerships with pay TV and telecommunications platforms (it already has distribution deals in place with the likes of 02 in the U.K., Deutsche Telekom in Germany and Movistar+ in Spain) and to refresh its catalog of classic titles with new release flagship titles, as the company did with Frozen 2, which Disney put up on Disney+ three months earlier than planned. Steadily refreshing Disney+’s library with newly available content “will be critical in keeping subscribers sticky,” Futuresource notes.
The full impact of the coronavirus on the entertainment industry is still unknown but, the group says, but “one certainty is that Disney+ uptake will be impressive.”